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We forecast 18% EBIT growth in 2026NYAB delivered another solid report, with 10% organic growth. The margin was diluted, as expected, by the Dovre acquisition in Q1, but was still 8.2% (slightly below ABGSC 8.4%). The free cash flow was strong (142% conversion from EBIT), and the conversion on the full year was 122% (89% avg. 2022-2025), which meant that NYAB is now back in a net cash position. The order backlog in Civil Enginerring was up 18% y-o-y, and with a book-to-bill at 1.1x, we think NYAB is well-positioned to deliver on expectations for 2026 (we forecast 8% organic growth). We lower '26e margins somewhat for a 4% cut to EBIT, but '27e is unchanged. We see 18% EBIT growth in '26e. Potential for a few large orders in H1'26In addition to the current order book, we see upside potential from upcoming projects: in 2025, NYAB signed two significant phase 1 agreements with Svenska Kraftnät and the Municipality of Uppsala for a new powerline and a tram project, with a potential combined phase 2 project value of ~SEK 4bn for NYAB. These kind of collaboration projects are an important part of NYAB's civil engineering business, and most phase 1s are usually converted to phase 2 wins. We are now nearing the phase 2 of these two major projects, and management expects them to close in Q2'26. We therefore see a good chance that NYAB will deliver a strong order intake in H1'26. Trading at 9x EBITA '26e, 10% below peersWith continued good momentum for the Civil Engineering business in 2026 and beyond, we expect margins to expand towards the company's target of >7.5%. That said, given the dilutive effect of Dovre short-term, we expect 6.2-6.3% in 2026-2027, but that 7.5% will be reached over time. Even though the group margin was 5.6% in 2025, it was still much better than construction peers at 3.9%. |